Raychem Reports Financial Results for Third Quarter of Fiscal 1999 Business Wire - April 19, 1999 16:48 MENLO PARK, Calif.---(BUSINESS WIRE)--April 19, 1999--Raychem Corporation today reported net income of $33 million ($0.43 per share) for the third quarter of fiscal 1999 versus net income of $40 million ($0.46 per share) for the third quarter of fiscal 1998. Revenues for the quarter were $445 million, essentially flat with year-ago results and down 2 percent in constant currency. "We were encouraged by several improving revenue trends in the quarter. Electronics OEM revenues hit record levels, driven by strong gains in touchscreens, sequential improvements in circuit protection components, and recovering demand in Asia. Fiber-optic component sales were also strong, but most of our infrastructure businesses continued to face weak demand and strong price pressures," said Richard A. Kashnow, Raychem chairman, CEO and president. "These trends should lead to moderate growth in fiscal 2000, but we expect only slight sequential revenue improvements in the fourth quarter. We are committed to drive operating income margins back to the 15 percent level next year. To reach that goal, we are taking actions to accelerate new product introductions and to achieve aggressive cost reductions in manufacturing and operating expenses." Electronics OEM components segment Third quarter revenues for the electronics OEM components segment were a record $215 million, up 3 percent in constant currency from the preceding quarter. This growth was driven by robust year-over-year gains in Asia and in the Elo TouchSystems business. Segment operating income was $34 million, versus $37 million in the prior year's third quarter, largely as a result of pricing pressures on electronics components. Revenues from sales of interconnect products, including wire, cable, heat-shrinkable tubing, marking systems, connectors, and other devices, were $125 million, essentially unchanged in constant currency terms from year-earlier levels. Sales of commercial aerospace products grew in the quarter despite slowdowns in North America. Shipments to electronics components distributors declined as they continued to reduce inventories. Strengthening demand from battery and computer customers helped to push up PolySwitch device unit volumes to record levels approaching a 1.5 billion part annual run rate. Volumes were up by 7 percent versus the preceding quarter and by 10 percent versus the year-ago quarter. Unit prices continued to decline reflecting overall electronic industry trends. Revenues of $57 million were down 4 percent on a constant currency basis from the year-ago quarter. The business had a positive book-to-bill ratio in the quarter. Elo TouchSystems revenues were a record $32 million, up 19 percent in constant currency from the year-ago quarter, with broad sales gains led by strong growth in Europe and Asia. Earlier this month, Elo announced "touch-on-tube" Apple iMacs(R) with touch sensing directly on the CRT, which eliminates the need for an overlay and results in a brighter, higher-quality image. This breakthrough technology provides a touch solution that preserves the functionality, image quality, and outward appearance of iMac. Telecommunications, energy, and industrial segment Revenues for the telecommunications, energy, and industrial segment were $230 million this quarter, 4 percent lower than the year-ago quarter on a constant currency basis, reflecting generally weak industrial demand outside North America. Operating income for the quarter was $34 million, compared with $39 million in the prior year's quarter. Sales of telecommunications products, including copper- and fiber-based network accessories, were $87 million, down 4 percent versus the year-ago quarter on a constant currency basis. Continuing double-digit growth in fiber-optic components was offset by reduced demand for copper cable accessories. Third quarter revenues for the Access Network Electronics unit were $27 million, up sequentially and down versus the year-ago period. Development of a next-generation multiplexing product with faster data transmission capability remains a high priority with product demonstration targeted for the Supercomm tradeshow in June. Revenues from energy network products were $62 million, up slightly from the prior year's third quarter. Sales gains in Asia and North America were offset by declines in Eastern Europe and Russia. Sales of heat tracing and corrosion prevention products and services were $55 million in the third quarter, up 2 percent in constant currency from the third quarter of last year. Improvements in heat tracing sales were largely offset by sales declines in corrosion prevention products due to a slowdown in oil industry projects. Regional revenues and tax rate During the third quarter, revenues in constant currency were up 8 percent in Asia and essentially flat in Europe compared with the year-ago quarter. Revenues were down 5 percent in North America and down 7 percent in the rest of the world. The quarter's results also include a change in the company's estimated annual effective tax rate to 33 percent from 35 percent, leading to a lower tax provision in the third quarter and a favorable tax rate adjustment from previous quarters of $2 million. Orders and backlog Shipments during the quarter were greater than incoming orders for Raychem's two business segments. Backlog at quarter's end was $249 million. Share repurchase and quarterly dividend Under the provisions of a previously established $300 million fiscal year share repurchase authorization, Raychem repurchased an additional 882,500 shares of its common stock in the quarter at an average price of $28 per share. For the fiscal year, the corporation has repurchased 6,802,500 shares at a total cost of $210 million. Raychem also announced its regular quarterly dividend of $0.09 per share, payable on June 9, 1999, to stockholders of record as of May 12, 1999. Forward Looking Statements This press release contains forward-looking statements, including statements made relating to future revenues, orders, backlog, income, earnings growth, cost reduction and new product development and introduction. Anticipated results and stated targets or goals or other forward- looking statements are not projections and do not assure results. Actual results may differ materially from the results anticipated in the statements made, due to a variety of factors, including, but not limited to, changing market and economic conditions, litigation, competition, product mix, currency, success in implementing cost reduction and productivity activities, and success in product development. Additional risk factors are described in the company's filings with the SEC. The company does not undertake an obligation to update its forward-looking statements to reflect future events or circumstances. Raychem Corporation Raychem Corporation of Menlo Park, California, is an international company with approximately 9,000 employees in 49 countries and revenues of $1.8 billion in fiscal 1998. The company utilizes expertise in materials science, electronics, and process engineering to develop, manufacture, and market high-performance products for electronics OEM businesses, telecommunications and energy networks, and the commercial and industrial infrastructure. More information on Raychem is available on the Internet at www.raychem.com. Copies of current Raychem financial information are available by fax. Contact Raychem's Information Hotline: 888/268-NEWS (6397) or 650/361-NEWS (6397). iMac is a trademark of Apple Computer, Inc. of Cupertino, CA RAYCHEM CORPORATION CONSOLIDATED CONDENSED STATEMENT OF INCOME (in thousands except per share data) (unaudited) Three Months Ended Nine Months Ended March 31, March 31, 1999 1998 1999 1998 Revenues $ 444,931 $ 445,162 $1,343,022 $1,367,310 Cost of goods sold 244,612 232,558 725,944 696,640 Research and development expense 25,579 26,091 74,482 81,603 Selling, general, and administrative expense 122,258 117,776 368,664 353,816 Loss on minority investment - 11,973 - 11,973 Interest expense, net 7,936 3,831 19,919 9,501 Other (income) expense, net (1,867) 179 123 4,381 Income before income taxes 46,413 52,754 153,890 209,396 Provision for income taxes 13,166 13,189 50,783 52,349 Net income $ 33,247 $ 39,565 $ 103,107 $ 157,047 Earnings per share- basic $ 0.43 $ 0.47 $ 1.31 $ 1.85 Average number of shares outstanding-basic 77,190 84,143 78,891 84,952 Earnings per share- assuming dilution $ 0.43 $ 0.46 $ 1.29 $ 1.81 Average number of shares outstanding- assuming dilution 77,766 85,878 79,758 86,970 Dividends per share $ 0.09 $ 0.08 $ 0.25 $ 0.22 RAYCHEM CORPORATION CONSOLIDATED CONDENSED BALANCE SHEET (in thousands except share data) (unaudited) ASSETS March 31, 1999 June 30, 1998 Current assets: Cash and cash equivalents $ 210,985 $ 92,667 Accounts receivable, net 369,775 325,039 Inventories: Raw materials 80,587 90,874 Work in process 49,411 64,143 Finished goods 126,871 123,931 Total inventories 256,869 278,948 Prepaid taxes 35,972 38,350 Other current assets 113,329 110,593 Total current assets 986,930 845,597 Property, plant, and equipment 1,200,300 1,147,923 Less accumulated depreciation and amortization 701,692 668,737 Net property, plant, and equipment 498,608 479,186 Deferred tax assets 186,143 186,595 Other assets 129,480 107,977 Total assets $ 1,801,161 $ 1,619,355 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable to banks $ 49,033 $ 181,284 Accounts payable 83,673 82,901 Compensation and benefits 69,269 56,878 Other accrued liabilities 91,109 88,914 Income taxes 68,064 62,871 Current maturities of long-term debt 10,363 6,574 Total current liabilities 371,511 479,422 Long-term debt 547,903 151,488 Deferred tax liabilities 24,035 27,762 Other long-term liabilities 96,392 92,257 Minority interests 10,239 8,784 Stockholders' equity: Preferred Stock, $1.00 par value Authorized: 15,000,000 shares; Issued: none - - Common Stock, $1.00 par value Authorized: 150,000,000 shares Issued: 90,015,261 and 90,028,103 shares, respectively 90,015 90,028 Additional contributed capital 425,051 425,477 Retained earnings 734,829 665,753 Accumulated other comprehensive income (34,251) (26,778) Treasury Stock, at cost (12,778,879 and 7,144,399 shares, respectively) (459,987) (290,320) Other (4,576) (4,518) Total stockholders' equity 751,081 859,642 Total liabilities and stockholders' equity $ 1,801,161 $ 1,619,355 CONTACT: Raychem, Menlo Park Scott F. Wylie, 650/361-7855 (Director of Corporate Communications) [email protected] or Spencer R. Sias, 650/361-7840 (Public Relations Manager) [email protected]
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